The major advantage of standard documentation is that it defines market practice. Its utilisation by Members of the LBMA avoids the need to continually check the terms involved in bilateral agreements, and its broad acceptance also provides comfort to clients of the market. By its nature it sets standards for the terms under which transactions are conducted and so provides confidence to users of market products.
The LBMA has developed and introduced a number of standard agreements. These cover the terms and conditions for forward, option and gold interest rate derivative transactions in the OTC market.
The following standard documentation is currently available:
The 1994 International Bullion Master Agreement (IBMA)
This is an agreement which gives a common set of terms reflecting best market practice for spot and forward bullion transactions and options, providing for the closing out and netting of outstanding bullion transactions between the parties in the event of default by one of them. As such, it is a single-product netting agreement. It is in a form that may be executed between the parties or, if not executed and one party is acting through an office in the UK, will be presumed to apply if no other bilateral documentation has been signed between the parties.
Copies of IBMA may be obtained in print format only from the LBMA – this publication is not available electronically. There is a charge if you are not within the LBMA membership. Please send an email if you are interested in obtaining a copy.
The 1997 ISDA Bullion Definitions
The LBMA co-operated with the International Swaps and Derivatives Association to produce these Definitions that are designed to incorporate bullion transactions within the netting provisions of business conducted under an ISDA Master Agreement. They enable bullion transactions to be incorporated into the cross-product netting of the broad range of products traded between international institutions. Where parties are signatories to ISDA, the terms of the 1997 Bullion Definitions may be applied by being incorporated into the confirmations of each transaction.
Standard Forms of Confirmation for IRS and FRA Transactions
These were also developed in conjunction with ISDA and represent stand-alone agreements or confirmations that bring these derivative products under the provisions of the 1992 ISDA Master Agreement.
The ISDA Bullion Definitions and the Standard Forms of Confirmation for IRS and FRA transactions are not available from the LBMA – please visit the ISDA website for more information.